Harvard Case - Kirin Brewery Co., Ltd.: The Dry Beer War
"Kirin Brewery Co., Ltd.: The Dry Beer War" Harvard business case study is written by Dominique Turpin, Christopher H. Lovelock, Joyce Miller. It deals with the challenges in the field of Strategy. The case study is 23 page(s) long and it was first published on : Jan 1, 1992
At Fern Fort University, we recommend that Kirin Brewery Co., Ltd. adopt a multi-pronged strategy to navigate the 'Dry Beer War' and secure its future in the evolving Japanese beer market. This strategy involves:
- Leveraging existing strengths: Capitalizing on Kirin's brand recognition, distribution network, and brewing expertise to develop and market innovative dry beers.
- Embracing disruptive innovation: Introducing new product categories and formats, such as low-carb and flavored dry beers, to cater to changing consumer preferences.
- Expanding internationally: Utilizing Kirin's existing international presence to introduce dry beers to new markets and diversify its revenue streams.
2. Background
Kirin Brewery Co., Ltd., a leading Japanese brewer, faced a significant challenge in the late 1980s with the emergence of 'dry beer' - a new style characterized by its crisp, clean taste and low sweetness. This shift in consumer preferences threatened Kirin's dominance, forcing the company to adapt its strategy.
The case study focuses on Kirin's response to this 'Dry Beer War,' highlighting the company's efforts to innovate, compete, and maintain its market share. Key protagonists include:
- Kazuo Inamori: Kirin's CEO, who spearheaded the company's transformation and introduced the 'Kirin One' dry beer.
- Asahi Breweries: Kirin's primary competitor, which successfully captured market share with its 'Super Dry' beer.
- Sankyo Brewery: A smaller competitor that also entered the dry beer market.
3. Analysis of the Case Study
Porter's Five Forces:
- Threat of new entrants: High, due to the relatively low barriers to entry in the beer industry.
- Bargaining power of buyers: Moderate, as consumers have multiple choices but are sensitive to price and quality.
- Bargaining power of suppliers: Low, as the industry relies on readily available raw materials.
- Threat of substitute products: Moderate, as consumers have alternatives like wine, spirits, and non-alcoholic beverages.
- Competitive rivalry: High, with intense competition among established brewers.
SWOT Analysis:
Strengths:
- Strong brand recognition and reputation
- Extensive distribution network
- Experienced brewing team
- Strong financial position
Weaknesses:
- Slow to adapt to changing consumer preferences
- Lack of innovation in product development
- Limited international presence
Opportunities:
- Growing demand for dry beer
- Emerging markets in Asia and beyond
- Potential for new product categories (e.g., low-carb, flavored)
Threats:
- Intense competition from domestic and international brewers
- Changing consumer tastes and preferences
- Economic fluctuations and global market volatility
Value Chain Analysis:
Kirin's value chain was primarily focused on brewing and distribution, with limited emphasis on innovation and marketing. The company needed to strengthen its value chain by:
- Investing in R&D: Developing new dry beer varieties and exploring innovative brewing techniques.
- Improving marketing and branding: Communicating the unique qualities of Kirin's dry beers and engaging with consumers.
- Expanding distribution channels: Reaching new markets and customer segments.
Business Model Innovation:
Kirin needed to innovate its business model to adapt to the changing market landscape. This could involve:
- Diversification: Expanding into new product categories and markets.
- Strategic alliances: Partnering with other companies to gain access to new technologies or distribution channels.
- Digital transformation: Utilizing technology to enhance efficiency, improve customer experience, and gather valuable data.
4. Recommendations
1. Develop and Market Innovative Dry Beers:
- Product Development: Invest in research and development to create new dry beer varieties that cater to diverse consumer preferences. This could include low-carb options, flavored beers, and limited-edition releases.
- Marketing and Branding: Emphasize the unique qualities of Kirin's dry beers, highlighting their crispness, dryness, and refreshing taste. Leverage digital marketing and social media to engage with younger consumers.
2. Embrace Disruptive Innovation:
- New Product Categories: Introduce new product categories beyond traditional dry beer, such as low-carb beers and flavored beers. These categories can attract new customers and expand Kirin's market reach.
- Innovative Packaging and Formats: Explore innovative packaging and formats, such as smaller cans, on-the-go pouches, and limited-edition collaborations.
3. Expand Internationally:
- Market Research and Analysis: Identify promising markets with high potential for dry beer consumption.
- Strategic Partnerships: Collaborate with local brewers or distributors to gain access to new markets and leverage their expertise.
- Customization and Localization: Adapt Kirin's dry beers to local tastes and preferences, ensuring cultural sensitivity and product appeal.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Kirin's strengths, weaknesses, opportunities, and threats. They consider:
- Core competencies: Leveraging Kirin's brewing expertise, brand recognition, and distribution network.
- External customers: Meeting the evolving needs and preferences of Japanese and international consumers.
- Competitors: Staying ahead of the competition by offering innovative products and expanding into new markets.
- Attractiveness: The potential for growth and profitability in the dry beer market, both domestically and internationally.
6. Conclusion
By embracing innovation, expanding internationally, and leveraging its existing strengths, Kirin can navigate the 'Dry Beer War' and secure its position as a leading brewer in the evolving global beverage market.
7. Discussion
Alternatives:
- Sticking to the status quo: This would likely lead to a decline in market share as consumers shift towards dry beer.
- Merging with a competitor: This could provide access to new resources and markets, but it carries significant risks and challenges.
Risks and Key Assumptions:
- Consumer preferences: The assumption is that consumers will continue to favor dry beer styles.
- Competition: The assumption is that Kirin can effectively compete with other brewers in the dry beer market.
- International expansion: The assumption is that Kirin can successfully enter new markets and adapt its products to local tastes.
8. Next Steps
- Develop a detailed strategic plan: Outline specific goals, timelines, and resource allocation for implementing the recommendations.
- Conduct market research: Gather data on consumer preferences, competitor activities, and market trends.
- Invest in R&D: Allocate resources to develop new dry beer varieties and explore innovative brewing techniques.
- Strengthen marketing and branding: Develop a comprehensive marketing strategy to promote Kirin's dry beers and engage with consumers.
- Explore international expansion opportunities: Identify promising markets and develop strategies for entering those markets.
By taking these steps, Kirin can navigate the 'Dry Beer War' and secure its future in the dynamic and competitive global beverage industry.
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Case Description
In response to being challenged in its home market by a smaller rival, Kirin Brewery, Japan's leading brewer, rejuvenated its lager beer and launched three new products, including a dry beer to compete with Asahi Breweries' enormously successful Super Dry. Shortly after launch of Kirin Dry, two other major Japanese brewers also introduced dry beers. Kirin executives must now develop a strategy for the 1989 beer season.
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